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Restructuring Charges and Cost Savings Initiatives | 3 Months Ended
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Oct. 27, 2024
Restructuring Charges [Abstract] |
Restructuring Charges | Restructuring Charges, Cost Savings Initiatives and Other Optimization Initiatives Multi-year Cost Savings Initiatives and Snyder's-Lance, Inc. (Snyder's-Lance) Cost Transformation Program and Integration Continuing Operations Beginning in 2015, we implemented initiatives to reduce costs and to streamline our organizational structure. Over the years, we expanded these initiatives by continuing to optimize our supply chain and manufacturing networks, as well as our information technology infrastructure. On March 26, 2018, we completed the acquisition of Snyder's-Lance. Prior to the acquisition, Snyder's-Lance launched a cost transformation program following a comprehensive review of its operations with the goal of significantly improving its financial performance. We continued to implement this program and identified opportunities for additional cost synergies as we integrated Snyder's-Lance. In 2022, we expanded these initiatives as we continued to pursue cost savings by further optimizing our supply chain and manufacturing network and through effective cost management. In the second quarter of 2023, we announced plans to consolidate our Snacks offices in Charlotte, North Carolina, and Norwalk, Connecticut, into our headquarters in Camden, New Jersey. A summary of the pre-tax charges recognized in the Consolidated Statements of Earnings related to these initiatives is as follows:
|  |  | Three Months Ended |  |  |  |
(Millions) |  |  | October 29, 2023 |  |  |  |  |  | Total Program
Restructuring charges |  |  | $ | 2 |  |  |  |  |  |  | $ | 297 |
Administrative expenses |  |  | 5 |  |  |  |  |  |  | 437 |
Cost of products sold |  |  | 3 |  |  |  |  |  |  | 128 |
Marketing and selling expenses |  |  | 2 |  |  |  |  |  |  | 23 |
Research and development expenses |  |  | 1 |  |  |  |  |  |  | 10 |
Total pre-tax charges |  |  | $ | 13 |  |  |  |  |  |  | $ | 895 |
A summary of the pre-tax costs associated with the initiatives is as follows:
(Millions) | Total Program
Severance pay and benefits | $ | 253 |
Asset impairment/accelerated depreciation | 134 |
Implementation costs and other related costs | 508 |
Total | $ | 895 |
Of the aggregate $895 million pre-tax costs incurred, approximately $720 million were cash expenditures. Segment operating results do not include restructuring charges, implementation costs and other related costs because we evaluate segment performance excluding such charges. A summary of the pre-tax costs associated with segments is as follows:
(Millions) |  |  |  |  | Total Program
Meals & Beverages |  |  |  |  | $ | 288 |
Snacks |  |  |  |  | 383 |
Corporate |  |  |  |  | 224 |
Total |  |  |  |  | $ | 895 |
As of July 28, 2024, we substantially completed the multi-year cost savings initiatives and Snyder's-Lance cost transformation program and integration. Certain phases that had not been fully implemented were incorporated into the 2025 cost savings initiatives described below. Sovos Brands Integration Initiatives On March 12, 2024, we completed the acquisition of Sovos Brands. See Note 3 for additional information. We identified opportunities for cost synergies as we integrate Sovos Brands. In 2024, we recorded Restructuring charges of $21 million for severance pay and benefits related to initiatives to achieve the synergies. The charges incurred in 2024 were associated with the Meals & Beverages segment. In 2025, the initiatives to achieve synergies were incorporated into the cost savings initiatives described below. 2025 Cost Savings Initiatives On September 10, 2024, we announced plans to implement cost savings initiatives beginning in 2025, including initiatives to further optimize our supply chain and manufacturing network, optimization of our information technology infrastructure and targeted cost management. We also identified additional opportunities for cost synergies as we integrate Sovos Brands. As mentioned above, we substantially completed our previous multi-year cost savings initiatives and Snyder's-Lance cost transformation program and integration. Certain initiatives from that program have been incorporated into our 2025 cost savings initiatives. Cost estimates for the 2025 initiatives, as well as timing for certain activities, are continuing to be developed. A summary of the pre-tax charges recorded in the Consolidated Statement of Earnings related to these initiatives is as follows:
| Three Months Ended |  |  |  |  |  |
(Millions) | October 27, 2024 |  |  |  |  |  |  |  |
Restructuring charges | $ | 6 |  |  |  |  |  |  |  |  |
Administrative expenses | 11 |  |  |  |  |  |  |  |  |
Cost of products sold | 8 |  |  |  |  |  |  |  |  |
Marketing and selling expenses | 1 |  |  |  |  |  |  |  |  |
Research and development expenses | 1 |  |  |  |  |  |  |  |  |
Total pre-tax charges | $ | 27 |  |  |  |  |  |  |  |  |
A summary of the pre-tax costs associated with the initiatives is as follows:
(Millions) | Recognized as of October 27, 2024
Severance pay and benefits | $ | 6 |
Asset impairment/accelerated depreciation | 9 |
Implementation costs and other related costs | 12 |
Total | $ | 27 |
The total estimated pre-tax costs for actions that have been identified to date are approximately $190 million and we expect to incur substantially all of the costs through 2028. These estimates will be updated as the detailed plans are developed. We expect the costs for the actions that have been identified to date to consist of the following: approximately $20 million in severance pay and benefits; approximately $50 million in asset impairment and accelerated depreciation; and approximately $120 million in implementation costs and other related costs. We expect these pre-tax costs to be associated with our segments as follows: Meals & Beverages - approximately 72%; Snacks - approximately 12% and Corporate - approximately 16%. Of the aggregate $190 million of pre-tax costs identified to date, we expect approximately $135 million will be cash expenditures. In addition, we expect to invest approximately $215 million in capital expenditures, of which we invested $18 million as of October 27, 2024. The capital expenditures primarily relate to optimization of production within our manufacturing network, implementation of our existing SAP enterprise-resource planning system for Sovos Brands and optimization of information technology infrastructure and applications. A summary of the restructuring activity and related reserves is as follows:
(Millions) |  | Severance Pay and Benefits |  |  |  |  |  | Implementation Costs and Other Related Costs(3) |  | Asset Impairment/Accelerated Depreciation |  |  |  | Total Charges
Accrued balance at July 28, 2024(1) |  | $ | 36 |  |  |  |  |  |  |  |  |  |  |  |  |
2025 charges |  | 6 |  |  |  |  |  |  | 12 |  |  | 9 |  |  |  |  | $ | 27 |
2025 cash payments |  | (7) |  |  |  |  |  |  |  |  |  |  |  |  |
Accrued balance at October 27, 2024(2) |  | $ | 35 |  |  |  |  |  |  |  |  |  |  |  |  |
__________________________________ (1)Associated with the multi-year cost savings initiatives and Snyder's-Lance cost transformation program and integration, and the Sovos Brands integration initiatives described above. Includes $12 million of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet. (2)Includes $12 million of severance pay and benefits recorded in Other liabilities in the Consolidated Balance Sheet. (3)Includes other costs recognized as incurred that are not reflected in the restructuring reserve in the Consolidated Balance Sheet. The costs are included in Administrative expenses, Cost of products sold, Marketing and selling expenses and Research and development expenses in the Consolidated Statements of Earnings. Segment operating results do not include restructuring charges, implementation costs and other related costs because we evaluate segment performance excluding such charges. A summary of the pre-tax costs associated with segments is as follows:
| Three Months Ended
(Millions) | October 27, 2024 |  |  |  |
Meals & Beverages | $ | 21 |  |  |  |  |
Snacks | 3 |  |  |  |  |
Corporate | 3 |  |  |  |  |
Total | $ | 27 |  |  |  |  |
Other Optimization Initiatives In the second quarter of 2024, we began implementation of an initiative to improve the effectiveness of our Snacks direct-store-delivery route-to-market network. Pursuant to this initiative we will purchase certain Pepperidge Farm and Snyder's-Lance routes where there are opportunities to unlock greater scale in select markets, combine them and sell the combined routes to independent contractor distributors. We expect to execute this program in a staggered rollout and to incur expenses of up to approximately $115 million through 2029. In the three-month period ended October 27, 2024, we incurred $8 million in Marketing and selling expenses related to this initiative. As of October 27, 2024, we have incurred $13 million in Marketing and selling expenses related to this initiative.

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 5.P.4.e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479823/420-10-S99-2 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482017/420-10-50-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482017/420-10-50-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/420/tableOfContent Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482017/420-10-50-1 + Details
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